Alabama business leaders more optimistic about economy

MOBILE, Ala. -- Alabama business leaders are feeling better about the economy, and Mobile's industry chiefs are more optimistic than their brethren in the rest of the state.

The University of Alabama's business confidence index rose to 55 for the first quarter of 2011. That's well above the midpoint of 50 that signals expansion, and up from 47.9 in the fourth quarter.

It's a sharp improvement for the business yardstick, which surveyed 247 executives in early December about their outlook for the first three months of the year. The survey asked business people if they believe the national and state economies will expand or contract in the coming quarter, and how they expect sales, profits, hiring and capital spending to change in their own industry.

In 2010's third quarter, statewide confidence moved into positive territory for the first time since late 2007. But it dipped back into negative outlook in the last three months of 2010. The improvement in this survey indicates an economic recovery that's on firmer ground, wrote Carolyn Trent, an analyst with the university.

"Both the U.S. and Alabama economies are expected to provide a much better environment for businesses in first quarter 2011, with the state forecasted to outperform the nation," she wrote.

The index for the Mobile area rose to 58 for the first quarter from 51.1 in the last three months of 2010. That was the second-rosiest outlook among the state's four largest urban areas, trailing only the 60.3 posted by Huntsville respondents.

A firming recovery

Expectations of Alabama and Mobile-area business leaders rose for the first quarter in the Alabama Business Confidence Index. Numbers above 50 anticipate economic expansion in the coming quarter:

Statewide: 55

Mobile: 58

Birmingham: 52.2

Montgomery: 53.9

Huntsville: 60.3

Source: University of Alabama Center for Business and Economic Research

Mobile panelists were more optimistic than those in the other three urban areas about the state's economy. They also forecast strong growth in their industry's sales, and more modest growth in profits, hiring and capital spending.

"Developments in Mobile's core aerospace, shipbuilding, steel and transportation industries in 2011 should help the area recover from persistently high unemployment as well as the 2010 Gulf oil spill," Trent wrote.

Birmingham, the state's largest metro area and largest economic region, continues to have restrained expectations about growth. While the overall Birmingham outlook is modestly positive, executives there said they expect their profits and capital expenditures to slip during this quarter, the only contracting measures in the entire survey.

Statewide, 48.6 percent of panelists said they expect sales in their industry to grow this quarter, while 32.8 percent expect flat sales and 18.6 percent expect sales to shrink.

Businesses with fewer than 20 employees were the most positive in every category, while those with 20 to 100 employees were the least positive.